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11.3 The use of IT at USAA
a. Why should USAA collect data on which auto parts are fixed most frequently?
What could it do with this data?
Companies should gather and store data if the benefits received from the data are greater than
b. Even though USAA offered to waive the deductible, the repair shops still managed
to convince 95% of the owners to replace rather than repair their damaged
windshields. How could USAA use its AIS to persuade more shop owners to repair
rather than replace their windows?
a How does the image-processing system at USAA add value to the organization?
The system adds value by streamlining business processes and making them more effective and
b How do the remote deposit capture and mobile banking system at USAA add value
to the organization?
USSA’s customers are widely scattered and USAA does not have local offices everywhere there
c Do an Internet search and find out what other advancements USAA has
introduced. Write a brief paragraph on each new application or other newsworthy
item you find (maximum limit of three applications or items).
1.4 Match the description in the right column with the information characteristic in the left column.
F 1. Relevant a. The report was carefully designed so that the data contained on the report
1.5 The Howard Leasing Company
aWhat is an accounts receivable aging report?
bWhy is an accounts receivable aging report needed for an audit?
cWhat is an accounts receivable aging report used for in normal
company operations?
An accounts receivable aging report is used in normal company operations to provide
information for:
Evaluating current credit policies
dWhat data will you need to prepare the report?
eWhere will you collect the data you need to prepare the report?
fHow will you collect the necessary data for the report?
If the data is in machine-readable form, it can be collected by preparing and running programs
gWhat will the report look like (i.e., how will you organize the data
collected to create the information your supervisor needs for the
audit)? Prepare an accounts receivable aging report in Excel or
another spreadsheet package.
The accounts receivable aging report should look something like the following, whether it is
prepared on paper or in Excel:
hHow will you distribute the report? How many copies will you
make? Who should receive the copies? What security features will
you implement?
The accounts receivable aging report should be restricted to employees with operational or
authoritative responsibility for customer accounts, such as the accounts receivable clerk, the
1.6 The use of IT at Tesco
a. What kind of information do you think Tesco gathers?
b How do you think Tesco has motivated over 12 million customers to sign up for its
Clubcard program?
c What can Tesco accomplish with the Clubcard data it collects? Think in term of strategy
and competitive advantage.
coupons for frequently purchased items and three coupons for items they are likely to buy
or that Tesco wants them to try. Tesco is so good at understanding their customer’s tastes
and preferences that their coupons are 10 to 15 times more likely to be used than other
Improved decision-making. Tesco has been able to make better decisions and set better
Customer loyalty. Tesco used Clubcard data to neutralize Wal-Mart’s most significant
New product rollouts. Analysis of Clubcard data showed that affluent customers were not
Improved supplier relationships. Outside companies are taking advantage of Tesco’s data to
d What are some of the disadvantages to the Clubcard program?
Some critics believe that loyalty card programs
Are too expensive to maintain and that companies can buy data to achieve similar results
eDo an Internet search to find out how Tesco is doing in comparison to Walmart
and other grocers and retailers. Write a few paragraphs explaining your findings.
Students should easily be able to find information that updates the competition between these
two powerhouse retail companies.
1.7 Have you ever imagined having one electronic device that does everything you would ever
need? Mobile phone makers in Japan have gone beyond the imagining phase. Cell phones in
Japan are becoming more versatile than ever. Newer models of cell phones contain a myriad
of applications and can do many of the things that a personal computer (PC) can do. PCs are
also able to function as phones. A small but growing number of professionals are trading in
their laptops for handheld computers. Cell phone manufacturers in the United States and
elsewhere are quickly catching up to their Japanese counterparts.
As technology is moving so quickly, there are no right answers to this question. There are thousands
of new cell phone applications are created each year. The author does not usually collect this
Some things to consider mentioning are:
a What commercial activities can be done with a cell phone? With a cell phone/PC
combination device? What do you do when you’re on your cell phone? What do you
expect to be doing in five years?
Newer models of cell phones contain a myriad of applications, including video cameras, digital
music players, television remote features, and digital recording. For example:
1 The E-wallet function virtually turns a cell phone into a credit card or debit card. Such a
cell phone can buy items from a vending machine or convenience store, pay for train tickets
2 The Japanese now use cell phones to watch up to 7 free television stations. Newer models
3 SONY has a hard disk recorder that can be programmed via mobile phone to record TV
b. How can businesses utilize this technology to attract more customers, sell more products,
advertise their products, facilitate the sale of products, and conduct and manage their
businesses more efficiently and effectively?
In order to make products and services available to the consumers using cell phones, an
infrastructure must be in place. Such things as bar coded products and vending machines that
c. What are some problems or drawbacks you can see with using these devices in business?
1.8 Classify each of the following items as belonging in the revenue, expenditure, human
resources/payroll, production, or financing cycle.
a Purchase raw materials – Expenditure cycle
b Pay off mortgage on factory – Financing cycle
c Hire a new assistant controller – Human resources/payroll cycle
r Sell DVD player – Revenue cycle
s Collect payment on customer accounts – Revenue cycle
t Obtain a bank loan – Financing cycle
SUGGESTED ANSWERS TO THE CASE
1 The website for this book contains an adaptation of Russell L. Ackoff’s classic article
“Management Misinformation Systems” from Management Science. In the article, Ackoff
identified five common assumptions about information systems and then explained why he
disagreed with them.
Read the five assumptions, contentions, and Ackoff’s explanations. For each of the five
assumptions, decide whether you agree or disagree with Ackoff’s contentions. Prepare a
report in which you defend your stand and explain your defense.
The exact nature of the answers will vary. Grading should be based on how well students defend the positions
they take. If you plan on discussing the case in class, be sure to cover these key points:
Assumption 1: If the problem is too much information, the solution involves filtering information.
Assumption 3: Is the key providing more data, or more information? Identifying the difference in a
Assumption 4: Ackoff presents a nice example of how sometimes too much communication hurts.
Assumption 5: The key point is to get the class to consider the degree to which the analogy about
